De’Longhi upgraded by Barclays as tariff impact less severe than expected

Investing.com -- Barclays (LON:BARC) has upgraded De’Longhi SpA to "equal weight" from "underweight" and raised its price target to €30 from €23 following stronger-than-expected first-quarter results and a reduced projected impact from U.S. tariffs.

The revision comes after De’Longhi reported a 15% year-over-year increase in revenue and a 24% rise in adjusted EBITDA for the first quarter of 2025, beating both Barclays’ and market consensus estimates. 

Despite the positive earnings surprise, shares have dipped about 1% since the results were released, underperforming the broader STOXX Europe 600 index.

Barclays analysts had initially assigned an “underweight” rating to De’Longhi in early April, citing concerns over margin pressure from potential U.S. tariffs and sensitivity to macroeconomic weakness, especially given the discretionary nature of the coffee appliance sector.

However, following the company’s updated guidance, those concerns appear less acute.

In March, De’Longhi had anticipated a tariff-related hit of €15–20 million to its full-year 2025 EBITDA. By May, that estimate was narrowed to €15 million, even as actual tariffs were worse than initially expected. 

According to Barclays, this indicates that the company is both conservatively assessing its exposure and better equipped than in 2019 to mitigate such impacts.

The brokerage also pointed to De’Longhi’s valuation, noting that the stock trades at around 7x estimated 2025 EBITDA, with a healthy balance sheet that includes €400 million in net cash and projected free cash flow of €300 million. 

These fundamentals, combined with strong management execution, influenced the upgrade decision. 

Barclays analysts noted that without a clear risk to 2025 or 2026 earnings per share, maintaining an "underweight" stance on a stock with these characteristics was no longer justified.

Despite the upgrade, Barclays stopped short of recommending an “overweight” rating. 

The brokerage cited ongoing uncertainty around U.S. tariff policy and potential retail pricing responses. 

In particular, the analysts noted that large retailers like Walmart (NYSE:WMT) could either pass on price increases to consumers, leading to inflation and potential demand pullback, or absorb costs and pressure supplier margins, both of which could negatively impact De’Longhi.

The company has already taken some pricing actions in the U.S., though the financial effect will only start to show in future quarters.

Its manufacturing shift, aiming to relocate 95% of the U.S.-bound NutriBullet production out of China by the summer, also supports the view that De’Longhi is actively managing tariff exposure.

Barclays raised its forecast for De’Longhi’s 2025 adjusted EBITDA margin to 16% from 14%, citing confidence in the company’s pricing strategy and geographic mix. Full-year 2025 EPS estimates were lifted to €2.28 from €1.96.

Still, risks remain. Barclays warned that escalation in tariffs, weaker-than-expected pricing power, or costly acquisitions could derail the current outlook.